Blame the eurocrats who never understood Hayek's dictum from his great book "The Fatal Conceit":

"The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design."

The euro is a fatal conceit.

The problem with the euro is that European unity didn't go far enough and the ordoliberals are in charge. Those are design flaws but not an indication that humanity didn't know enough. Afterall, there were millions of us saying at the time that the amount of unity being planned and then agreed to would prove grossly insufficient.

By the way, the ordoliberals are vastly closer to Hayek's ideology than to ours. It was sticking closer to Hayekianism that caused the problems.

At https://www.youtube.com/watch?feature=pl ayer_detailpage&v=6qVAVnVfgcg#t=686 (11:25) and on the issue of whether or not reserves are used for lending purposes, you will note via careful listening that Dr. Claudio Borio, Head of the Monetary and Economic Department, Bank for International Settlements (aside from the Fed as global lender of last resort, the central bank of central banks), does not say that reserves are not "used" for lending purposes but rather focuses upon the what is actually the issue, which is that intentionally increasing reserves does not force lenders to make loans against those reserves. Please note also that the very real US reserve ratio of 10% was not discussed.

In the US, the issue is whether reserves come first and whether the Fed will always supply enough reserves after the fact, as some MMTers have suggested. We have maintained that in all likelihood, the Fed looks at solvencies first concerning such matters but has been extremely lax in making the actual mechanism known to even economists who've focused upon ferreting out what's really going on concerning regular and excess reserves vis a vis lending and money or credit creation and fractional-reserve banking.

The issue could have been, and should have been, better clarified; however, it was nevertheless gratifying and helpful that Dr. Borio didn't fail to show, albeit likely too subtly for most, that reserves are a part of the lending mechanism.

Should the Greek legislature go along with this? [This entry predates the Greek Parliament's vote.]

Greece has agreed to pass long-resisted economic reforms after marathon talks with its creditors, which will ensure a €82bn-€86bn bailout and staying in the eurozone. The FT's Martin Sandbu explains the deal.

"It is the Versailles Treaty for the present age," said Mr Varoufakis....
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Let there be no doubt, it was the decision by the European Central Bank to freeze ELA at €89bn two weeks ago that precipitated the final crisis and broke Syriza's will to resist. ...

...the ECB is by its acts dictating a political settlement, and serving as the enforcement arm of the creditors rather than upholding EU treaty law.

It took a stand that further destabilised the financial system of an EMU member state that was already in grave trouble, and arguably did so in breach of its primary treaty duty to uphold financial stability. It is a watershed moment.
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"If the specifics of debt relief are not written clearly into the overall package, this is not worth anything," said Mr Varoufakis.
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For the eurozone this "deal" is the worst of all worlds. They have solved nothing. Germany and its allies have for the first time attempted to eject a country from the euro, and by doing so have violated the sanctity of monetary union.

Rather than go forward in times of deep crisis to fiscal and political union to hold the euro together — as the architects of EMU always anticipated - they have instead gone backwards.

We had a small group, a 'war cabinet' within the ministry, of about five people that were doing this: so we worked out in theory, on paper, everything that had to be done [to prepare for/in the event of a Grexit]. But it's one thing to do that at the level of 4-5 people, it's quite another to prepare the country for it. To prepare the country an executive decision had to be taken, and that decision was never taken.
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My view was, we should be very careful not to activate it. I didn't want this to become a self-fulfilling prophecy. I didn't want this to be like Nietzsche's famous dictum that if you stare into the abyss long enough, the abyss will stare back at you. But I also believed that at the moment the Eurogroup shut out banks down, we should energise this process.
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We should issue our own IOUs, or even at least announce that we're going to issue our own euro-denominated liquidity; we should haircut the Greek 2012 bonds that the ECB held, or announce we were going to do it; and we should take control of the Bank of Greece. This was the triptych, the three things, which I thought we should respond with if the ECB shut down our banks.

... I was warning the Cabinet this was going to happen [the ECB shut our banks] for a month, in order to drag us into a humiliating agreement. When it happened — and many of my colleagues couldn't believe it happened — my recommendation for responding "energetically", let's say, was voted down.
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... I'm not going to betray my own view, that I honed back in 2010, that this country must stop extending and pretending, we must stop taking on new loans pretending that we've solved the problem, when we haven't; when we have made our debt even less sustainable on condition of further austerity that even further shrinks the economy; and shifts the burden further onto the have no ts, creating a humanitarian crisis. It's something I'm not going to accept. I'm not going to be party to.

In our view, they should have gotten 100% ready to pull the trigger on issuing a currency. They should have done everything just short of actually issuing it. They should have been prepared so that once the order is given to issue it, there would have been no questions but only actions unfolding automatically in the quickest and most efficient and efficacious manner.

We could make a strong case that they should have issued it anyway. In fact, we would done it (issued) had we been in charge there.

A few things that many of us took for granted, and that some of us believed in, ended in a single weekend. By forcing Alexis Tsipras into a humiliating defeat, Greece's creditors have done a lot more than bring about regime change in Greece or endanger its relations with the eurozone. They destroyed the eurozone as we know it. They demolished the idea of a monetary union as a step towards a democratic political union and reverted to the nationalist European power struggles of the 19th and early 20th century. They demoted the eurozone into a toxic fixed exchange-rate system, with a shared single currency, run in the interests of Germany, held together by the threat of absolute destitution for those who challenge the prevailing order. The best thing that can be said of the weekend is the brutal honesty of those perpetrating this regime change.

"Progressives should be appalled by European Union's ruination of Greece. It's time to reclaim the Eurosceptic cause," writes Owen Jones in a remarkable piece in The Guardian. The new term "Lexit" is gaining currency.
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All Souls economist Kevin O'Rourke says the next Left-wing party that rises to challenge the EMU [Economic and Monetary Union of the European Union] will not be as "feckless" as Mr Tsipras, and will not bargain from a position of such abject weakness.

"The lesson that they will draw from this debacle is: negotiating with Germany is a waste of time; be willing to act unilaterally, be willing to default unilaterally, have a plan for achieving a primary surplus if you haven't already achieved it, have a hard default and euro exit option in your back pocket, and be willing to use it at the first sign of hassle from the ECB," he said.

Everyone is talking about the IMF's new update to its debt sustainability analysis, which says that Greece's attempt to surrender is doomed to failure without massive debt relief. That's surely the right conclusion.

However, it's hard to accept the document's claim that this is a new development, the result of the banking crisis of the past two weeks plus the economic troubles since Syriza came to power.

We haven't read the document; so, if Paul Krugman is accurately representing it, it is not just hard to accept the document's claim attributed to it by Paul but rather impossible to accept it.

When I go on an appointment, I always bring with me an offer presentation sheet. It summarizes the transaction in plain English on a single page, in big font with just the numbers. It's very easy to read, and I don't try to hide anything. I show how much money the seller could potentially make IF they wanted to put the time and money into the house to bring it up to retail. So things like escrow fees, repairs (itemized), realtor fees, etc. are all accounted for in the net profit.

It allows them to make a comparison: "I could make X today if I sell as is, or I could make Y if I wait several months and jump through all the hoops necessary to get this thing on market." And if you are dealing with motivated sellers, guess which option they typically go for?

For Greece, leaving the EU may be perilous; but it opens provocative possibilities. The government could nationalize its insolvent banks along with its central bank, and start generating the credit the country desperately needs to get back on its feet. If it chose, it could do this while still using the euro, just as Ecuador uses the US dollar without being part of the US. (For more on how this could work, see here.)

If Greece switches to drachmas, the funding possibilities are even greater. It could generate the money for a national dividend, guaranteed employment for all, expanded social services, and widespread investment in infrastructure, clean energy, and local business. Freed from its Eurocrat oppressors, Greece could model for the world what can be achieved by a sovereign country using publicly-owned banks and publicly-issued currency for the benefit of its own economy and its own people.

The ordoliberals want European member states to follow the rules, but those rules are rigged by and for those ordoliberals. That's the problem.

We we're hoping that the current crisis that started unraveling in 2008 would result in a change in those rules to reflect reality, which for all mixed economies is Keynesianism. We aren't convinced that all such hope is lost, but it is increasingly looking like the Germans are simply being stubbornly ideological and would rather fail and be immoral than admit they've been wrong and quickly change accordingly.

Two more deaths were blamed Wednesday on the mammoth storms that ravaged Kentucky and parts of Indiana and West Virginia this week, which have left five other people missing.
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About 150 homes were destroyed, and hundreds more were damaged.

In his speech before Parliament, Finance Minister Euclid Tsakalotos sought to defend Greece's agreement with creditors as a necessary evil. "It's a difficult agreement, a deal which only time will show if it is economically viable," he said. "I don't know if we did the right thing, but I know we felt we had no choice," he said. "We never said this was a good agreement," he added, noting that "a lot will depend on how politicians will handle the many changes included in the agreement."

Well, that seals it. Both Tsipras and Tsakalotos completely caved in.

It was completely unnecessary and highly counter-productive.

They were afraid to bail out the Greek people via nationalizing the Greek banking system and issuing a debt-free currency in the exact quantity to match much needed productivity.

It's very sad.

Let's hope Spain and the others who are still suffering a great deal refuse to follow Tsipras' extremely terrible, inexcusable example (not that Merkel, et al., aren't responsible for the continuing harm that will befall the Greeks).

We are now decidedly anti-eurozone and will remain so until ordoliberalism is no longer the ruling ideology behind the euro. We are not merely eurosceptics but anti-euro.

If there aren't radical changes to the European Union and eurozone so that at least Keynesianism is the dominant economic school of thought, not that, that's good enough, we believe the Union will break up or be dismal.

Confronting this challenge is straightforward. It requires the completion of the banking union. If Greeks had been confident that their deposits would be available regardless of the state of their government's finances, there would have been no run; no withdrawal restrictions; and no capital controls. Their big banks needed to be European banks, rather than Greek banks. This means having mutually and jointly guaranteed deposit insurance.

Of course, implementing greater burden sharing in the aftermath of Greece is politically daunting and may be viewed by many in authority as a nonstarter: indeed, the public shows little interest in a more federal Europe. Yet, deposit insurance would be cheaper for Europeans than the €300 billion they are on the hook for now if, as we expect, Greece defaults or its debt is "re-profiled" to lower its value. ...
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... Without that, without a truly pan-European financial system that is mutually and jointly guaranteed by all of the countries of the Eurosystem, we doubt that the common currency can survive.

In our view, they federalize or fail and federalization is no guarantee.

If such programmes have not been called coups before, why are they now?

That's easy. It's called the Internet. People are able to read what others are voicing in ways that were never possible before. It's the awakening of democratic forces and urges. People can readily see that neoliberalism and ordoliberalism don't work on an international basis and that what the Greeks voted against in the greferendum was not honored but rather completely ignored by the German powers that be. That's why it's been termed a coup, and it makes perfect sense because that's what it is.

The reaction of the Troika was to impose austerity, which as we now well know caused Greek GDP to fall by 25% and unemployment to reach record levels—permanently destroying opportunities for generations of young Greeks. Syriza inherited the disaster and focused on the need to increase cash by increasing tax revenue through battling tax evasion, corruption, monopolistic practices, and even fuel and tobacco smugglers. It agreed to begin reforming labour laws, cut spending and to increase the retirement age. Some errors were made by the young government, but it surely cannot be said that they were not making headway as many of these reforms had indeed begun. Indeed, during the new government's first four months, the treasury reduced the deficit massively, and had a primary budget surplus of €2.16bn (not including debt interest payments), which far exceeded their initial target of a €287m deficit.

Did the austerity help? No. As John Maynard Keynes stressed, during bad times when consumers and the private sector are cutting back, it makes no sense for government to cut as well. This is what makes recessions turn into depressions. Instead the Troika asked for more and more cuts, and wanted them made even more quickly, giving the Greeks little breathing room to continue with the reforms that they had begun. And making it impossible to get Greece back on its feet (only through future growth will they pay back the debt) through any sort of investment strategy.